9th Edition

ISBN: 9781259722660

Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher: McGraw-Hill Education

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The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business…

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Textbook Question

Chapter 20, Problem 20.2E

Change in principle; change in inventory methods

• LO20–2

Aquatic Equipment Corporation decided to switch from the LIFO method of costing inventories to the FIFO method at the beginning of 2018. The inventory as reported at the end of 2017 using LIFO would have been $60,000 higher using FIFO. Retained earnings at the end of 2017 was reported as $780,000 (reflecting the LIFO method). The tax rate is 40%.

Required:

1. Calculate the balance in retained earnings at the time of the change (beginning of 2018) as it would have been reported if FIFO had been used in prior years.
2. Prepare the journal entry at the beginning of 2018 to record the change in accounting principle.

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Chapter 20, Problem 20.1E

Chapter 20, Problem 20.3E

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Chapter 20 Solutions

Intermediate Accounting

Ch. 20 - Prob. 20.1Q Ch. 20 - There are three basic accounting approaches to...Ch. 20 - Prob. 20.3Q Ch. 20 - Lynch Corporation changes from the...Ch. 20 - Sugarbaker Designs Inc. changed from the FIFO...Ch. 20 - Most changes in accounting principles are recorded...Ch. 20 - Southeast Steel, Inc., changed from the FIFO...Ch. 20 - Prob. 20.8Q Ch. 20 - Its not easy sometimes to distinguish between a...Ch. 20 - For financial reporting, a reporting entity can be...

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